Understanding the Speed and Size of Bank Runs in Historical Comparison

Abstract

enced deposit runs that were extraordinarily fast and large by historical standards. To explain these historically unprecedented developments, banking regulators have focused on three factors: (i) changes in technology that have enabled faster withdrawals, (ii) social media that facilitated information dissemination and coordination among depositors, and (iii) uninsured deposits that were concentrated among bank customers with connections to each other (Federal Reserve, 2023a and 2023b; FDIC, 2023a and 2023b; New York DFS, 2023; California DFPI, 2023). This essay provides historical comparisons to help elucidate how these factors may have increased the severity of recent runs relative to other severe runs that took place in 1984 and 2008—the most severe runs in US history since the Great Depression and until recently. It appears that technological improvements can explain some of the increase in speed, but large increases in speed likely only apply to household and small business depositors. Major corporations, which were the predominant source of deposit withdrawals in prior run episodes at the Understanding the Speed and Size of Bank Runs in Historical Comparison